CELG Celgene: Difficult to initially evaluate the Juno deal -- UBS (115.24 +0.33)
UBS notes the aspects of the JUNO deal that they like include:
[1] If the CAR-T treatment approach emerges as important, then CELG will be well-positioned;
[2] the direct P&L exposure principally arises only when there is proof of concept data;
[3] R&D synergies could arise from the broad-based collaboration that includes autoimmune optionality and doesn't shut off the potential to collaborate with other parties,
[4] it largely utilizes offshore cash as this is principally for OUS rights. However, there are no named partnered programs as of today, which makes the deal hard to evaluate. Further, if the programs fail and JUNO loses value, it will have been an expensive experiment.
Big picture, firm likes the investment in innovative programs to drive LT growth, though it will take time for the fundamentals to play out; Buy, $130 tgt.
